Prospectus
June 15, 2000
Leuthold Select Industries Fund
Grizzly Short Fund
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Leuthold Select Industries Fund seeks capital appreciation. It invests
substantially all of its assets in equity securities traded in the U.S.
securities markets.
The Grizzly Short Fund sells short common stocks of U.S. companies. The
aggregate amount of its outstanding short positions typically will be
approximately equal to its outstanding net assets.
Please read this Prospectus and keep it for future reference. It contains
important information, including information on how the Funds invest and the
services they offer to shareholders.
An investment in the Funds is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
Leuthold Select Industries Fund
Grizzly Short Fund
100 North Sixth Street
Suite 412A
Minneapolis, Minnesota 55403
(612) 332-9141
TABLE OF CONTENTS
Questions Every Investor Should Ask
Before Investing in the Funds 1
Fees and Expenses 3
Other Information about the Funds'
Investment Objectives 4
Management of the Funds 4
The Funds' Share Price 7
Purchasing Shares 7
Redeeming Shares 9
Exchanging Shares 11
Dividends, Distributions and Taxes 12
QUESTIONS EVERY INVESTOR SHOULD ASK BEFORE
INVESTING IN THE FUNDS
1. WHAT ARE THE FUNDS' GOALS?
LEUTHOLD SELECT INDUSTRIES FUND
Leuthold Select Industries Fund seeks capital appreciation.
GRIZZLY SHORT FUND
Grizzly Short Fund seeks capital appreciation. However, as its principal
investment strategy is to sell stocks short, it may be difficult for the Fund to
achieve its goal in rising stock markets.
2. WHAT ARE THE FUNDS' PRINCIPAL INVESTMENT STRATEGIES?
LEUTHOLD SELECT INDUSTRIES FUND
Leuthold Select Industries Fund seeks capital appreciation by investing
substantially all of its assets in equity securities traded in the U.S.
securities markets. The Select Industries Fund utilizes a disciplined,
unemotional, quantitative investment approach that is based on the belief
investors can achieve superior investment performance through group selection.
The Fund's investment adviser, Leuthold Weeden Capital Management, LLC (the
"Adviser") believes that as shifts among industry groups in the equity market
have become more dramatic, group selection has become as, or more, important
than individual stock selection in determining investment performance.
The Adviser considers a group to be a collection of stocks whose investment
performance tends to be similarly influenced by a variety of factors. The
Adviser currently monitors about 125 groups. The five major types of groups the
Adviser monitors are:
o Traditional Broad Economic Sectors such as Information Technology,
Health Care, or Financial Services.
o Thematic Broad Groups that may bridge a number of industries such as
"Inflation Beneficiaries" or "Education".
o Industry Specific Groups are narrower themes. Examples include
"Airlines," "Healthcare Facilities" or "Semiconductors".
o Quantitative Themes are groups where the only commonality of the stocks
in the group are statistical with typically no industry commonality.
Examples include "Emerging Growth" or "Undervalued and Unloved".
o Special Situations are groups that the Adviser may monitor for only a
limited period of time. Examples include "Asia Exposure" and "Year 2000
Problem Solvers".
The Select Industries Fund will invest in companies of all sizes and industries
as well as in "growth" stocks and "value" stocks. The Adviser updates its group
selection monthly and will adjust the Fund's portfolio as necessary to keep the
Fund invested in stocks in those groups which the Adviser believes are the most
attractive. Such monthly adjustments may result in high portfolio turnover.
GRIZZLY SHORT FUND
The Grizzly Short Fund sells stocks short. Short selling involves the sale of
borrowed securities. When the Fund sells a stock short, it incurs an obligation
to replace the stock borrowed at whatever its price may be at the time it
purchases the stock for delivery to the securities lender. The Fund will
realize a gain if at that time the price of the stock is less than the price of
the stock when it was sold short, and will realize a loss if at that time the
price of the stock is greater than the price of the stock when it was sold
short. The aggregate amount of its outstanding short positions typically will
be approximately equal to its net assets. When the Fund's outstanding short
positions equal its net assets, it is "100% short." Like the Select Industries
Fund, the Grizzly Short Fund utilizes a disciplined, unemotional, quantitative
investment approach. The Grizzly Short Fund believes that in all market
conditions there will exist some companies whose stocks are overvalued by the
market and that capital appreciation can be realized by selling short those
stocks. However the best overall results typically will be achieved in
declining stock markets. In rising stock markets the risk of loss usually is
much greater.
The Fund's investment adviser, also Leuthold Weeden Capital Management, LLC,
follows a universe of domestic common stocks that:
o Have a market capitalization in excess of $1 billion; and
o Trade, on average, shares having a value of $1 million or more each day.
The Fund generally will have outstanding approximately 50 stocks that it has
sold short. The Fund may increase the number of stocks it sells short if market
conditions warrant an increase. These stocks will be diversified over a number
of industries. In determining which stocks to sell short, the Adviser
calculates a Vulnerability Index for each security in the universe of stocks it
follows. The Vulnerability Index attempts to identify those stocks which are
most likely to decline in price or to underperform the market. In calculating a
Vulnerability Index the Adviser considers twelve or more components. Some of
the components include fundamental factors such as earnings growth or dividends,
while other components consider market factors such as institutional trading
activity or insider buying or selling. From time to time the Fund may sell
short index-related securities. The Fund will do so to rapidly increase its
short position.
The Fund also follows a disciplined approach in determining when to cover its
short positions. The factors the Adviser considers in determining when to cover
short positions include:
o Price movements of the stocks sold short;
o Changes in the Vulnerability Index;
o Daily trading volume of the stock; and
o News and articles concerning the stock appearing in financial services
and publications.
3. WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUNDS?
Investors in either Fund may lose money. There are risks associated with each
Fund's principal investment strategies.
LEUTHOLD SELECT INDUSTRIES FUND
o MARKET RISK: The Fund invests principally in common stocks. The prices
of the stocks in which the Fund invests may decline for a number of
reasons. The price declines may be steep, sudden and/or prolonged.
o FOREIGN SECURITIES RISK: Some of the securities in which the Fund
invests may be issued by foreign companies, either directly or through
American Depository Receipts ("ADRs"). Investments in these securities,
even though publicly traded in the United States, may involve risks
which are in addition to those inherent in domestic investments.
Foreign companies may not be subject to the regulatory requirements of
U.S. companies and, as a consequence, there may be less publicly
available information about such companies. Also foreign companies may
not be subject to uniform accounting, auditing and financial reporting
standards and requirements comparable to those applicable to U.S.
companies.
o HIGH PORTFOLIO TURNOVER RISK: High portfolio turnover necessarily
results in correspondingly greater transaction costs (such as brokerage
commissions or markups or markdowns) which the Fund must pay and
increased realized gains (or losses) to investors. Distributions to
shareholders of short-term capital gains are taxed as ordinary income
under federal income tax laws.
o QUANTITATIVE INVESTMENT APPROACH RISK: The Fund utilizes a quantitative
investment approach based on past market performance. While the Adviser
continuously reviews and refines, if necessary, its investment approach,
there may be market conditions where the quantitative investment
approach performs poorly.
GRIZZLY SHORT FUND
o MARKET RISK: The Fund sells securities short with the expectation that
their prices will decline. However, the prices of the securities the
Fund has sold short may rise for a number of reasons.
o SHORT SALES RISK: The Fund's investment performance will suffer if it
is required to close out a short position earlier than it had intended.
This would occur if the securities lender required the Fund to deliver
the securities the Fund borrowed at the commencement of the short sale
and the Fund was unable to borrow the securities from other securities
lenders.
o RISING STOCK MARKET RISK: The Fund typically will be "100% short."
Accordingly in rising stock markets its risk of loss will be greater
than in declining stock markets. Over time stock markets have risen
more often than they have declined.
o HIGH PORTFOLIO TURNOVER RISK: High portfolio turnover necessarily
results in correspondingly greater transaction costs (such as brokerage
commission or markups or markdowns) which the Fund must pay and
increased realized gain (or losses) to investors. Distributions to
shareholders of short-term capital gains are taxed as ordinary income
under federal income tax laws.
o QUANTITATIVE INVESTMENT APPROACH RISK: The Fund utilizes a quantitative
investment approach based on past market performance. While the Adviser
continuously reviews and refines, if necessary, its investment approach,
there may be market conditions where the quantitative investment
approach performs poorly.
Investors who wish to hedge some or all of their stock portfolios might find
that investment goal consistent with an investment in the Fund. However because
movements in the prices of the stocks the Fund has sold short are unlikely to
correlate perfectly with the stocks in an investor's portfolio, such an investor
could incur both a loss on the investor's stock portfolio and the investor's
investment in the Fund.
4. HOW HAVE THE FUNDS PERFORMED?
Both the Leuthold Select Industries Fund and the Grizzly Short Fund will
commence operations on or after June 15, 2000 and therefore have no investment
performance information to provide investors. Both Funds will provide investment
performance information after they have completed their first full calendar year
of operations.
FEES AND EXPENSES
The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Funds.
SHAREHOLDER FEES
(fees paid directly from your investment)
LEUTHOLD SELECT GRIZZLY
INDUSTRIES FUND SHORT FUND
--------------- ----------
Maximum Sales Charge No No
(Load) Imposed on Sales Sales
Purchases (as a Charge Charge
percentage of
offering price)
Maximum Deferred Sales No No
Charge (Load) Deferred Deferred
Sales Sales
Charge Charge
Maximum Sales Charge No No
(Load) Imposed on Sales Sales
Reinvested Dividends Charge Charge
and Distributions
Redemption Fee None*<F1> None*<F1>
Exchange Fee None**<F2> None**<F2>
*<F1> Our transfer agent charges a fee of $12.00 for each wire redemption.
**<F2> Our transfer agent charges a fees of $5.00 for each telephone exchange.
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
LEUTHOLD SELECT GRIZZLY
INDUSTRIES FUND SHORT FUND
--------------- ----------
Management Fees 1.00% 1.25%
Distribution
(12b-1) Fees None None
Other Expenses 0.95% 1.25%
----- -----
Service Fees 0.25% 0.25%
All remaining
Other Expenses 0.70%*<F3> 1.00%*<F3>
Total Annual Fund
Operating Expenses 1.95%*<F3> 2.50%*<F3>
----- -----
----- -----
*<F3> Based on our estimates for the fiscal year ending September 30, 2000.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in each Fund for the time periods
indicated and then redeem all of your shares at the end of these periods. The
Example also assumes that your investment has a 5% return each year and that
each Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be:
1 YEAR 3 YEARS
------ -------
Leuthold Select Industries Fund $198 $612
Grizzly Short Fund $253 $779
OTHER INFORMATION ABOUT
THE FUNDS' INVESTMENT OBJECTIVES
Both the Leuthold Select Industries Fund and the Grizzly Short Fund seek capital
appreciation. Although they have no intention of doing so, each Fund may change
its investment objective without obtaining shareholder approval. Shareholders
will be notified of any such change. Please remember that an investment
objective is not a guarantee. An investment in each Fund might not appreciate
and investors could lose money.
Neither the Leuthold Select Industries Fund nor the Grizzly Short Fund will take
temporary defensive positions. Although neither Fund will take a temporary
defensive position, each Fund will invest in money market instruments (like U.S.
Treasury Bills, commercial paper or repurchase agreements) and hold some cash so
that it can pay expenses and satisfy redemption requests. Because the Grizzly
Short Fund's principal investment strategy is to effect short sales, a
significant portion of its assets will be held in liquid securities, including
money market instruments, as "cover" for its short sales. Typically the
obligations associated with the Grizzly Short Fund's outstanding short sales
will be approximately equal to the Grizzly Short Fund's investments in money
market instruments.
MANAGEMENT OF
THE FUNDS
LEUTHOLD WEEDEN CAPITAL MANAGEMENT, LLC MANAGES EACH FUND'S INVESTMENTS
Leuthold Weeden Capital Management, LLC (the "Adviser") is the investment
adviser to each Fund. The Adviser's address is:
100 North Sixth Street
Suite 412A
Minneapolis, MN 55403
The Adviser is the successor to Leuthold & Anderson, Inc., which commenced
operations in 1987, and Leuthold, Weeden & Associates, L.P., which commenced
operations in 1991, and has been each Fund's only investment adviser. As the
investment adviser to the Funds, the Adviser manages the investment portfolio
for each Fund. It makes the decisions as to which securities to buy and which
securities to sell. The Leuthold Select Industries Fund will pay the Adviser an
annual investment advisory fee equal to 1.00% of its average net assets, and the
Grizzly Short Fund will pay the Adviser an annual investment advisory fee equal
to 1.25% of its average net assets. Steven C. Leuthold and James E. Floyd are
the co-portfolio managers of the Leuthold Select Industries Fund and as such are
primarily responsible for the day-to-day management of that Fund's portfolio.
Steven C. Leuthold and Charles D. Zender are the co-portfolio managers of the
Grizzly Short Fund and as such are primarily responsible for the day-to-day
management of that Fund's portfolio. Mr. Leuthold is the chief executive
officer of the managing member of the Adviser. Mr. Leuthold also has been
Chairman and Portfolio Manager of Leuthold & Anderson, Inc. since its
organization in August, 1987, a portfolio manager of Leuthold, Weeden &
Associates, L.P. since January, 1991 and Chairman of The Leuthold Group since
November, 1981. Mr. Floyd is a Managing Director and a member of the Adviser
and has been a senior analyst of The Leuthold Group since November, 1981. Mr.
Zender is a Managing Director and a member of the Adviser and has been a
Managing Director of The Leuthold Group since 1991.
THE ADVISER HAS EXPERIENCE MANAGING ACCOUNTS WITH THE SAME INVESTMENT OBJECTIVE
AS THE GRIZZLY SHORT FUND
We are providing historical performance data of certain investment advisory
accounts managed by the Adviser and its predecessors. The data illustrates the
investment performance of all portfolios similar to the Grizzly Short Fund and
compares the performance to specified market indices. (Since January 1, 1996 a
portion of the assets in certain accounts managed by the Adviser and its
predecessors were managed using substantially identical investment strategies
and techniques as those used by the Leuthold Select Industries Fund. However,
since only a portion of the assets in those accounts were so managed, we are not
providing the investment performance of those accounts.) The Short Portfolio
Composite includes all active accounts of the Adviser and its predecessors
invested in the AdvantHedge Short Selling Program. The Short Portfolio
Composite does not include all of the assets under management of the Adviser and
its predecessors, but does include all accounts having the same investment
objective as the Grizzly Short Fund. It may not accurately reflect the
performance of all accounts managed by the Adviser and its predecessors. The
accounts included in the Short Portfolio Composite had the same investment
objective as the Grizzly Short Fund and were managed using substantially
similar, though not in all cases identical, investment strategies and techniques
as those used by the Grizzly Short Fund. All performance data is historical and
investors should not consider this performance data as an indication of the
future performance of the Grizzly Short Fund or the results an individual
investor might achieve by investing in the Grizzly Short Fund. Investors should
not rely on the historical performance of the Adviser and its predecessors when
making an investment decision.
All returns are time-weighted total rates of return and include the reinvestment
of interest and the payment of dividends on securities sold short. The
performance information for the Short Portfolio Composite is net of the advisory
fees charged by the Adviser and its predecessors to the accounts comprising the
Short Portfolio Composite and all other expenses (except custody and related
expenses). The performance information for the Short Portfolio Composite does
not reflect the assessment of the Grizzly Short Fund's advisory fee or other
expenses equivalent to the Grizzly Short Fund's operating expenses. The fees
and expenses of the Short Portfolio Composite were less than the annual expenses
of the Grizzly Short Fund. The performance of the Short Portfolio Composite
would have been lower had the Short Portfolio Composite incurred higher fees
and expenses. The net effect of the deduction of the Grizzly Short Fund's
advisory fee and other operating expenses on annualized performance, including
the compounded effect over time, may be significant. The Short Portfolio
Composite was not subject to certain investment limitations, diversification
requirements and other restrictions imposed by the Investment Company Act of
1940 and the Internal Revenue Code. If it had been, its performance may have
been adversely affected.
The performance information for the Short Portfolio Composite and the S&P 500 is
based on data supplied by the Adviser or from statistical services, reports or
other sources which the Adviser believes are reliable. This performance
information has not been verified by any third party and is unaudited. AS
DEMONSTRATED BELOW A SHORT FUND IN A GENERALLY RISING STOCK MARKET CAN BE
EXPECTED TO SIGNIFICANTLY UNDERPERFORM THE S&P 500 AND OTHER COMPARABLE BROAD-
BASED STOCK MARKET INDICES. PORTFOLIO GAINS FOR A SHORT FUND ARE TYPICALLY
REALIZED IN DECLINING STOCK MARKET PERIODS.
<TABLE>
ANNUAL RATES OF RETURN(1)<F4>
YEARS ENDED
DECEMBER 31, 1993 1994 1995 1996 1997 1998 1999
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Short Portfolio Composite (1.25)% 2.66% (20.16)% (8.99)% (4.83)% (0.89)% (3.36)%
S&P 500 Index 10.01% 1.22% 37.47% 23.00% 33.30% 28.57% 21.02%
COMPOUNDED ANNUAL RATES OF RETURN(1)<F4>SINCE
(FOR THE PERIOD ENDED DECEMBER 31, 1999) 1 YEAR 3 YEARS 5 YEARS JUNE 1, 1992
------ ------- ------- ------------
Short Portfolio Composite (3.36)% (3.04)% (7.91)% (5.60)%
S&P 500 Index 21.02% 27.53% 28.52% 20.71%
</TABLE>
(1)<F4> The calculation of the rates of return was performed in accordance
with the principles set forth in the Performance Presentation
Standards endorsed by the Association for Investment Management and
Research ("AIMR"). Other performance calculation methods, including
the SEC method, may produce different results. The AIMR performance
presentation criteria require the presentation of at least a ten-year
performance record or performance for the period since inception, if
shorter.
Total annual rate of return is the change in redemption value of
units, assuming the reinvestment of dividends. Compounded annual rate
of return represents the level annual rate which, if earned for each
year in a multiple year period, would produce the cumulative rate of
return over that period.
Please remember that past performance is not necessarily an indication of future
performance. Investors should also be aware that other performance calculation
methods may produce different results, and that comparisons of investment
results should consider qualitative circumstances and should be made only for
portfolios with generally similar investment objectives.
SERVICE PLANS
Each of the Funds has adopted a service plan pursuant to which it may pay fees
of up to 0.25% of its average daily net assets to broker-dealers, financial
institutions or other service providers that provide services to investors in
the Funds. These services may include:
o assisting investors in processing purchase, exchange and redemption
requests;
o processing dividend and distribution payments from the Funds;
o providing information periodically to customers showing their positions
in Fund shares;
o providing sub-accounting;
o forwarding communications from the Funds to their shareholders.
Because these fees are paid out of a Fund's assets, over time these fees will
increase the cost of your investment.
THE FUNDS' SHARE PRICE
The price at which investors purchase shares of a Fund and at which shareholders
redeem shares of a Fund is called its net asset value. Each Fund calculates its
net asset value as of the close of regular trading on the New York Stock
Exchange (normally 4:00 p.m. Eastern Time) on each day the New York Stock
Exchange is open for trading. The New York Stock Exchange is closed on holidays
and weekends. Each Fund calculates its net asset value based on the market
prices of the securities (other than money market instruments) it holds. The
Funds value most money market instruments they hold at their amortized cost.
Each Fund will process purchase orders that it receives and accepts and
redemption orders that it receives prior to the close of regular trading on a
day in which the New York Stock Exchange is open at the net asset value
determined LATER THAT DAY. They will process purchase orders that they receive
and accept and redemption orders that they receive AFTER the close of regular
trading at the net asset value determined at the close of regular trading on the
NEXT DAY the New York Stock Exchange is open.
PURCHASING SHARES
HOW TO PURCHASE SHARES FROM THE FUNDS
o Read this Prospectus carefully.
o Determine how much you want to invest, keeping in mind the following
minimums:
NEW ACCOUNTS
Individual Retirement
Accounts $ 1,000
All other accounts $10,000*<F5>
*<F5> The Funds may, but are not required to, accept initial investments
of not less than $1,000 from investors who are related to, or
affiliated with, shareholders who have invested $10,000 in the
Funds.
EXISTING ACCOUNTS
Dividend reinvestment No Minimum
Automatic
Investment Plan $ 50
All other accounts $100
o Complete the Purchase Application accompanying this Prospectus,
carefully following the instructions. For additional investments,
complete the Additional Investment Form attached to your Fund's
confirmation statements. (The Funds have additional Purchase
Applications and Additional Investment Forms if you need them.) If you
have any questions, please call 1-800-273-6886.
o Make your check payable to "Leuthold Select Industries Fund" or "Grizzly
Short Fund," as applicable. All checks must be drawn on U.S. banks.
The Funds will not accept cash or third party checks. FIRSTAR MUTUAL
FUND SERVICES, LLC, THE FUNDS' TRANSFER AGENT, WILL CHARGE A $25 FEE
AGAINST A SHAREHOLDER'S ACCOUNT FOR ANY PAYMENT CHECK RETURNED FOR
INSUFFICIENT FUNDS. THE SHAREHOLDER WILL ALSO BE RESPONSIBLE FOR ANY
LOSSES SUFFERED BY A FUND AS A RESULT.
Send the application and check to:
FOR FIRST CLASS MAIL
Leuthold Funds, Inc.
c/o Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
FOR OVERNIGHT DELIVERY SERVICE
OR REGISTERED MAIL
Leuthold Funds, Inc.
c/o Firstar Mutual Fund Services, LLC
615 East Michigan Street, 3rd Floor
Milwaukee, WI 53202-5207
PLEASE DO NOT MAIL LETTERS BY OVERNIGHT DELIVERY SERVICE OR REGISTERED MAIL TO
THE POST OFFICE BOX ADDRESS.
If you wish to open an account by wire, please call 1-800-273-6886 prior to
wiring funds in order to obtain a confirmation number and to ensure prompt and
accurate handling of funds. FUNDS SHOULD BE WIRED TO:
Firstar Bank, N.A.
777 East Wisconsin Avenue
Milwaukee, WI 53202
ABA #075000022
CREDIT:
Firstar Mutual Fund Services, LLC
Account #112-952-137
FURTHER CREDIT:
(name of Fund to be purchased)
(shareholder registration)
(shareholder account number, if known)
You should then send a properly signed Purchase Application marked "FOLLOW-UP"
to either of the addresses listed above. PLEASE REMEMBER THAT FIRSTAR BANK,
N.A. MUST RECEIVE YOUR WIRED FUNDS PRIOR TO THE CLOSE OF REGULAR TRADING ON THE
NEW YORK STOCK EXCHANGE FOR YOU TO RECEIVE SAME DAY PRICING. THE FUNDS AND
FIRSTAR BANK, N.A. ARE NOT RESPONSIBLE FOR THE CONSEQUENCES OF DELAYS RESULTING
FROM THE BANKING OR FEDERAL RESERVE WIRE SYSTEM, OR FROM INCOMPLETE WIRING
INSTRUCTIONS.
PURCHASING SHARES FROM BROKER-DEALERS, FINANCIAL INSTITUTIONS AND OTHERS
Some broker-dealers may sell shares of the Funds. These broker-dealers may
charge investors a fee either at the time of purchase or redemption. The fee,
if charged, is retained by the broker-dealer and not remitted to the Funds or
the Adviser. Some broker-dealers may purchase and redeem shares on a three day
settlement basis.
The Funds may enter into agreements with broker-dealers, financial institutions
or other service providers ("Servicing Agents") that may
include the Funds as investment alternatives in the programs they offer or
administer. Servicing agents may:
o Become shareholders of record of the Funds. This means all requests to
purchase additional shares and all redemption requests must be sent
through the Servicing Agent. This also means that purchases made
through Servicing Agents are not subject to the Funds' minimum purchase
requirement.
o Use procedures and impose restrictions that may be in addition to, or
different from, those applicable to investors purchasing shares directly
from the Funds.
o Charge fees to their customers for the services they provide them.
Also, the Funds and/or the Adviser may pay fees to Servicing Agents to
compensate them for the services they provide their customers.
o Be allowed to purchase shares by telephone with payment to follow the
next day. If the telephone purchase is made prior to the close of
regular trading on the New York Stock Exchange, it will receive same day
pricing.
o Be authorized to accept purchase orders on behalf of the Funds. This
means that the Funds will process the purchase order at the net asset
value which is determined following the Servicing Agent's acceptance of
the customer's order.
If you decide to purchase shares through Servicing Agents, please carefully
review the program materials provided to you by the Servicing Agent. When you
purchase shares of the Funds through a Servicing Agent, it is the responsibility
of the Servicing Agent to place your order with the Funds on a timely basis. If
the Servicing Agent does not place the order on a timely basis, or if it does
not pay the purchase price to the Funds within the period specified in its
agreement with the Funds, it may be held liable for any resulting fees or
losses.
OTHER INFORMATION ABOUT PURCHASING
SHARES OF THE FUNDS
The Funds may reject any share purchase application for any reason. The Funds
will not accept initial purchase orders made by telephone, unless they are from
a Servicing Agent which has an agreement with the Funds.
The Funds will issue certificates evidencing shares purchased only upon request.
The Funds will send investors a written confirmation for all purchases of
shares.
The Funds offer an automatic investment plan allowing shareholders to make
purchases on a regular and convenient basis. The Funds also offer a telephone
purchase option permitting shareholders to make additional purchases by
telephone. The Funds offer the following retirement plans:
TRADITIONAL IRA
ROTH IRA
Investors can obtain further information about the automatic investment plan,
the telephone purchase plan and the IRAs by calling 1-800-273-6886. The Funds
recommend that investors consult with a competent financial and tax advisor
regarding the IRAs before investing through them.
REDEEMING SHARES
HOW TO REDEEM (SELL) SHARES BY MAIL
Prepare a letter of instruction containing:
o account number(s)
o the amount of money or number of shares being redeemed
o the name(s) on the account
o daytime phone number
o additional information that the Funds may require for redemptions by
corporations, executors, administrators, trustees, guardians, or others
who hold shares in a fiduciary or representative capacity. Please
contact the Funds' transfer agent, Firstar Mutual Fund Services, LLC, in
advance, at 1-800-273-6886 if you have any questions.
Sign the letter of instruction exactly as the shares are registered. Joint
ownership accounts must be signed by all owners.
Have the signatures guaranteed by a commercial bank or trust company in the
United States, a member firm of the New York Stock Exchange or other eligible
guarantor institution IN THE FOLLOWING SITUATIONS:
o The redemption proceeds are to be sent to a person other than the person
in whose name the shares are registered
o The redemption proceeds are to be sent to an address other than the
address of record
o The redemption request is received within 30 days after an address
change.
A NOTARIZED SIGNATURE IS NOT AN ACCEPTABLE SUBSTITUTE FOR A SIGNATURE GUARANTEE.
Send the letter of instruction to:
FOR FIRST CLASS MAIL
Leuthold Funds, Inc.
c/o Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
FOR OVERNIGHT DELIVERY SERVICE
OR REGISTERED MAIL
Leuthold Funds, Inc.
c/o Firstar Mutual Fund Services, LLC
615 East Michigan Street, 3rd Floor
Milwaukee, WI 53202-5207
PLEASE DO NOT MAIL LETTERS BY OVERNIGHT DELIVERY SERVICE OR REGISTERED MAIL TO
THE POST OFFICE BOX ADDRESS.
HOW TO REDEEM (SELL) SHARES BY TELEPHONE
Instruct Firstar Mutual Fund Services, LLC that you want the option of redeeming
shares by telephone. This can be done by completing the appropriate section on
the Purchase Application. Shares held in IRAs cannot be redeemed by telephone.
Assemble the same information that you would include in the letter of
instruction for a written redemption request.
Call Firstar Mutual Fund Services, LLC at 1-800-273-6886. PLEASE DO NOT CALL
THE FUNDS OR THE ADVISER.
HOW TO REDEEM (SELL) SHARES THROUGH SERVICING AGENTS
If your shares are held by a Servicing Agent, you must redeem your shares
through the Servicing Agent. Contact the Servicing Agent for instructions on
how to do so.
REDEMPTION PRICE
The redemption price per share you receive for redemption requests is the next
determined net asset value after:
o Firstar Mutual Fund Services, LLC receives your written request in
proper form with all required information.
o Firstar Mutual Fund Services, LLC receives your authorized telephone
request with all required information.
o A Servicing Agent that has been authorized to accept redemption requests
on behalf of the Funds receives your request in accordance with its
procedures.
PAYMENT OF REDEMPTION PROCEEDS
o For those shareholders who redeem shares by mail, Firstar Mutual Fund
Services, LLC will mail a check in the amount of the redemption proceeds
no later than the seventh day after it receives the written request in
proper form with all required information.
o For those shareholders who redeem by telephone, Firstar Mutual Fund
Services, LLC will either mail a check in the amount of the redemption
proceeds no later than the seventh day after it receives the redemption
request, or transfer the redemption proceeds to your designated bank
account if you have elected to receive redemption proceeds by either
Electronic Funds Transfer or wire. An Electronic Funds Transfer
generally takes up to 3 business days to reach the shareholder's account
whereas Firstar Mutual Fund Services, LLC generally wires redemption
proceeds on the business day following the calculation of the redemption
price. However, the Funds may direct Firstar Mutual Fund Services, LLC
to pay the proceeds of a telephone redemption on a date no later than
the seventh day after the redemption request.
o Those shareholders who redeem shares through Servicing Agents will
receive their redemption proceeds in accordance with the procedures
established by the Servicing Agent.
OTHER REDEMPTION CONSIDERATIONS
When redeeming shares of the Funds, shareholders should consider the following:
o The redemption may result in a taxable gain.
o Shareholders who redeem shares held in an IRA must indicate on their
redemption request whether or not to withhold federal income taxes. If
not, these redemptions will be subject to federal income tax
withholding.
o The Funds may delay the payment of redemption proceeds for up to seven
days in all cases.
o If you purchased shares by check, the Funds may delay the payment of
redemption proceeds until they are reasonably satisfied the check has
cleared (which may take up to 15 days from the date of purchase).
o Firstar Mutual Fund Services, LLC will send the proceeds of telephone
redemptions to an address or account other than that shown on its
records only if the shareholder has sent in a written request with
signatures guaranteed.
o Firstar Mutual Fund Services, LLC will not accept telephone redemption
requests made within 30 days after an address change._ The Funds
reserve the right to refuse a telephone redemption request if it
believes it is advisable to do so. The Funds and Firstar Mutual Fund
Services, LLC may modify or terminate their procedures for telephone
redemptions at any time. Neither the Funds nor Firstar Mutual Fund
Services, LLC will be liable for following instructions for telephone
redemption transactions that they reasonably believe to be genuine,
provided they use reasonable procedures to confirm the genuineness of
the telephone instructions. They may be liable for unauthorized
transactions if they fail to follow such procedures. These procedures
include requiring some form of personal identification prior to acting
upon the telephone instructions and recording all telephone calls.
During periods of substantial economic or market change, telephone
redemptions may be difficult to implement. If a shareholder cannot
contact Firstar Mutual Fund Services, LLC by telephone, he or she should
make a redemption request in writing in the manner described earlier.
o Firstar Mutual Fund Services, LLC currently charges a fee of $12 when
transferring redemption proceeds to your designated bank account by wire
but does not charge a fee when transferring redemption proceeds by
Electronic Funds Transfer.
o If your account balance falls below $1,000 because you redeem shares,
you will be given 60 days to make additional investments so that your
account balance is $1,000 or more. If you do not, the Fund may close
your account and mail the redemption proceeds to you.
EXCHANGING SHARES
ELIGIBLE FUNDS
Shares of the Funds may be exchanged for shares of:
o Leuthold Select Industries Fund
o Grizzly Short Fund
o Leuthold Core Investment Fund
o Firstar Money Market Fund
at their relative net asset values. The Adviser also advises the Leuthold Core
Investment Fund. An affiliate of Firstar Mutual Fund Services, LLC, advises
Firstar Money Market Fund. Please call 1-800-273-6886 for prospectuses
describing Leuthold Core Investment Fund and Firstar Money Market Fund. You may
have a taxable gain or loss as a result of an exchange because the Internal
Revenue Code treats an exchange as a sale of shares.
HOW TO EXCHANGE SHARES
1. Read this Prospectus (and, if applicable, the prospectus for Leuthold Core
Investment Fund) carefully.
2. Determine the number of shares you want to exchange keeping in mind that
exchanges are subject to a $10,000 minimum.
3. Call Firstar Mutual Fund Services, LLC at 1-800-273-6886. You may also make
an exchange by writing to Leuthold Funds, Inc., c/o Firstar Mutual Fund
Services, LLC, 3rd Floor, P.O. Box 701, Milwaukee, Wisconsin 53201-0701.
DIVIDENDS, DISTRIBUTIONS
AND TAXES
The Funds distribute substantially all of their net investment income quarterly
and substantially all of their capital gains annually. You have three
distribution options:
AUTOMATIC REINVESTMENT OPTION - Both dividend and capital gains distributions
will be reinvested in additional shares of the Funds.
CASH DIVIDEND OPTION - Dividends will be paid in cash and capital gains will be
reinvested in additional shares of the Funds.
ALL CASH OPTION - Both dividend and capital gains distributions will be paid in
cash.
You may make your distribution election on the Purchase Application. You may
change your election by writing to Firstar Mutual Fund Services, LLC or by
calling 1-800-273-6886.
Each Fund's distributions, whether received in cash or additional shares, may be
subject to federal and state income tax. These distributions may be taxed as
ordinary income and capital gains (which may be taxed at different rates
depending on the length of time the applicable Fund holds the assets generating
the capital gains). The Leuthold Select Industries Fund expects that its
distributions will consist primarily of long-term and short-term capital gains.
The Grizzly Short Fund expects that normally its distributions will consist of
both ordinary income and short-term capital gains.
To learn more about the Leuthold Select Industries Fund and the Grizzly Short
Fund, you may want to read their Statement of Additional Information (or "SAI")
which contains additional information about the Funds. The Funds have
incorporated by reference, the SAI into the Prospectus. This means that you
should consider the contents of the SAI to be part of the Prospectus.
You also may learn more about the Funds' investments by reading the Funds'
annual and semi-annual reports to shareholders. The annual report includes a
discussion of the market conditions and investment strategies that significantly
affected the performance of the Funds during their last fiscal year.
The SAI and the annual and semi-annual reports are all available to shareholders
and prospective investors without charge, simply by calling Firstar Mutual Fund
Services, LLC at 1-800-273-6886.
Prospective investors and shareholders who have questions about Funds may also
call the following number or write to the following address.
Leuthold Funds, Inc.
100 North Sixth Street
Suite 412A
Minneapolis, MN 55403
1-888-200-0409
The general public can review and copy information about Funds (including the
SAI) at the Securities and Exchange Commission's Public Reference Room in
Washington, D.C. (Please call 1-202-942-8090 for information on the operations
of the Public Reference Room.) Reports and other information about the Funds
are also available on the EDGAR Database at the Securities and Exchange
Commission's Internet site at http://www.sec.gov and copies of this information
may be obtained, upon payment of a duplicating fee, by electronic request at the
following E-mail address: [email protected], or by writing to:
Public Reference Section
Securities and Exchange Commission
Washington, D.C. 20549-6009
Please refer to the Funds' Investment Company Act File No. 811-09094 when
seeking information about the Funds from the Securities and Exchange Commission.
